Maui to sue Bank of America over loans to native Hawaiians
Maui County is preparing to sue Bank of America for allegedly failing to keep its promise to lend to native Hawaiians. Bank of America executive Cathy Bessant (third from right) and other bank executives meet with Hawaiian activists Ian Chan Hodges (far left) and Kehau Filimoe’atu (second from left) in 1998 in Maui.
Courtesy of Kehau Filimoe’atu
In the summer of 1998, a new community development officer from NationsBank visited Hawaii in the midst of what was then the largest bank merger in history. It wasn’t for a vacation.
This young executive, Cathy Bessant, now director of operations and technology at Bank of America, met a group of former Hawaiians at the Iolani Palace, home of the last King and Queen of Hawaii. She said the bank would honor a massive commitment that the bank it was merging with had made.
Four years earlier, BankAmerica had promised to provide $ 150 million in home loans to native Hawaiians by 1998. When the bank was considering merging with Charlotte’s NationsBank, BankAmerica knew it was not going to do the same. in time, the bank’s lawyers later told the court. Bessant’s assurances allayed fears that the promise would fall apart.
Two decades later, many Hawaiians don’t believe Bank of America kept Bessant’s promise, and one county is taking action.
In July, Maui County voted to hire a special advocate to sue Bank of America for alleged breach of a past pledge to provide home loans to Native Hawaiians and for fraudulent foreclosure, ushering in a new chapter in the fight against several decades of banking with the state. .
The county authorized the hiring of a special attorney to sue Bank of America, along with other mortgage lenders, in a 7-1 vote on July 10. That same day, Bank of America filed a petition in federal court to stop the lawsuit.
“While we respect and understand the issues faced by the native Hawaiian community, the county has authorized a groundless legal action regarding a pledge made in 1994. The bank has kept its pledge,” said the spokesperson for Bank of America, Bill Halldin, in a statement.
The bank has asked a federal court to preempt the Maui lawsuit and make a ruling that the county has no claims it can make against the bank.
If Bank of America held on, “there would be more Hawaiian families who could have passed on generational wealth in the form of their homes,” said Keani Rawlins-Fernandez, vice chairman of Maui County Council, in an interview. .
The county has yet to hire a lawyer or file a complaint against the bank. A special lawyer is expected to be hired by next week, according to David Raatz, the supervisory legislative lawyer for Maui County.
A missed timeline
The lawsuit stems from a 1994 commitment by BankAmerica to lend $ 150 million in federally backed home loans on land reserved for Native Hawaiians.
The bank pledged to make the loans as it purchased Honolulu-based Liberty Bank. At the time, activists alleged that BankAmerica discriminated against native Hawaiians and Filipinos. The engagement allayed some of these concerns.
This plunged Bank of America into one of the biggest economic problems for native Hawaiians – the Hawaiian Home Lands waiting list.
About 28,000 people with at least half of Native Hawaiian ancestry are on a waiting list to gain access to the lands reserved for them. Some die before they are even removed from the list. The list contributes to the ongoing economic struggles of native Hawaiians, who suffer from unemployment and poverty rates higher than the state’s overall population.
“The waiting list represents a continuing systemic injustice,” said Bumpy Kanahele, an activist born in Hawaii.
In 1997, Bank of America said this month in federal court that it had realized it could not make enough home loans to the Hawaiian Home Lands on time.
The following year, after the announcement of the merger with NationsBank, Bessant flew to Hawaii.
She told Indigenous elders, state officials and affordable housing activists the bank would honor the pledge, but was not going to meet that timeline, according to an interview with affordable housing activist Ian Chan Hodges and a 2014 letter from Kehaulani Filimoe’atu of Na Po’e Kokua, an affordable housing group. Both met Bessant in 1998.
Yet after Bessant’s visit, the bank was not on track to meet its goal anytime soon. By the end of 2002, the bank had only made about $ 30 million in loans to native Hawaiians on land reserved for them, according to the bank’s lawsuit against Maui in July.
“Strong competition” from other lenders in the program and a limited supply of housing in Hawaiian lands made it difficult for the bank to meet its goal, the bank said.
In the face of this tight market, the bank negotiated with state officials in 2003 to dramatically change the pledge, setting new criteria for what the pledge meant with the Department of Hawaiian Home Lands, which oversees the reserved lands. to native Hawaiians.
The new criteria included multiple types of funding and grants to meet the $ 150 million goal, and allowed certain types of funding to count three or four times their dollar value toward the goal.
The bank said that in the years since that deal, it invested tens of millions of dollars to promote home ownership for Hawaiians. In 2007, a DHHL official told the bank that under the new criteria, it had met its commitment of $ 150 million.
‘They lied’
Many politicians and activists do not believe that the changed criteria really matter for engagement. The new goals made them feel like the bank was getting a good deal.
In 2012, the head of the Hawaiian Homes Commission, which oversees DHHL, said Bank of America failed to honor its commitment because the commission did not approve it, among other reasons. A DHHL spokesperson confirmed that the 2012 letter is the ministry’s current position.
Governor David Ige and US Senator Brian Schatz also said the bank had failed to honor its commitment to lend to Hawaiian natives.
“They lied. They never did,” Schatz said at a town hall in 2019.
In 2018 and 2019, Hawaii’s attorney general looked into whether he could press charges against the bank, according to Bank of America’s case against Maui in federal court.
Last August, a Hawaii Assistant Attorney General wrote in an email to a Maui County attorney “that there is no legal basis” for the state to sue Bank of America over this. engagement, according to an exhibit in Bank of America’s lawsuit against the county. . The email did not address the legal status of the counties.
Spokesmen for Ige, Attorney General Clare Connors and Schatz did not respond to requests for comment.
“Although some native Hawaiians continue to insist that the pledge is not fulfilled, their arguments are based on one-sided, incomplete and, at times, inaccurate recitations,” wrote Andrew Plepler, global environmental manager. , social and governance of Bank of America. in a July 8 letter to Maui County Council.